3-Month Manhattan N'hood Performance Check
A: Lets check in on the 3-MTH pending sales trends for all Manhattan neighborhoods tracked by the UD system. We should keep in mind that the start point for this 3-month trends check will be early May, which saw record levels of contract activity. So consider this discussion a focus on just how much slower individual neighborhoods across Manhattan have gotten since peak contract activity in May.
Notable Neighborhood Moves since the last check on April 24th:
-- Battery Park City continues to see rising demand, +38% over past 3-months
-- Chelsea cools down big time seeing demand go from +91% to -1.9% over past 3 months
-- Gramercy sees 3-month demand slide from +59.1% to -19.5% from the last nhood check in late April
-- Midtown East sees demand stable, still +13.6% over the last 3-months
-- SoHo/NoHo/W Village & Tribeca markets continue to see rising demand over the last 3-months
-- Harlem/Morningside Heights was the only submarket to see a rise in supply (+10.3%), over the last 3-months
Here are all the Manhattan neighborhood trends we track; I added supply trends after each neighborhood's 3-month pending sales #:
3-MONTH PENDING SALES TRENDS -- SUPPLY TREND
Battery Park City: +38.1% -- supply down 21.5% over this time
Inwood/Wash. Heights: +21.1% -- supply down 22.1% over this time
Harlem/Hamilton Heights: +16.3% -- supply down 17.5% over this time
Midtown East: +13.6% -- supply down 12.8% over this time
Harlem/Morningside Heights: +11.6% -- supply up 10.3% over this time
Soho/Noho/West Village: +8.9% -- supply down 21.5% over this time
Tribeca: +8.3% -- supply down 32% over this time
Murray Hill/Kips Bay: +7.1% -- supply down 16.7% over this time
Midtown West/Clinton: +4.8% -- supply down 14.3% over this time
Fidi/Civic Center: +4.4% -- supply down 10.4% over this time
--- BASELINE PENDING SALES ALL MANHATTAN = +2.1% ---
Upper West Side: Pending Sales Flat -- supply down 27% over this time
Upper East Side: -0.2% -- supply down 21.1% over this time
Chelsea/Midtown South: -1.9% -- supply down 25.1% over this time
East Harlem: -2.7% -- supply down 32% over this time
LES/East Village/Union Square: -6.7% -- supply down 5.7% over this time
Gramercy/Flatiron: -19.5% -- supply down 21.3% over this time
These 3-month neighborhood performance discussions easily tell us where the market is today, in real-time, and where we came from three months ago. In general, its clear that both contract activity & active supply is down in most neighborhoods across Manhattan compared to early May. This jives with general data trends as well discussed last week. The main questions & answers go something like this:
Q: Is the market still active out there?
A: Yes, but not nearly as active as it was in May and it seems peak activity for 2012 has already occurred. Typically we see deal volume slow for the summer and supply to fall further as sellers who didn't procure acceptable bids take their listing off the market. The next bump in demand tends to occur in October, as listings come back on market after the Labor Day holiday.
Q: Where are the bids? Is there a correlation between deal volume & price action?
A: Generally yes. While real estate is an illiquid asset class, generally speaking, sellers will have an advantage when deal volume is high while buyers will have more leverage when deal volume is lower and there is less buy side competition. Factor in supply trends & macro economic conditions that may affect buy side confidence and we can start to get an idea of the trend in price action. Based on UD data and what I have seen in the field, I would expect price action to rise for the next 3-4 months as pending sales in the pipeline ultimately close and get counted in the reports. The SE Condo Index already is starting to show this.
The median sales #'s should be in the beginning phases of telling us just how strong the Manhattan market was between April & July. We already know that deal volume was off the charts during these months, and continues to be much stronger than what it normally is for the month of August. The real-time market ticker continues to see 30-day deal volume over 1,000+; signaling an active marketplace.
In terms of price points, over the last 3 months Manhattan Pending Sales trends are as follows:
PENDING SALES ALL MANHATTAN = +2.1%
PENDING SALES <$1M = +5.3%
PENDING SALES $1M-$2M = -4.7%
PENDING SALES $2M-$5M = +5.4%
PENDING SALES $5M+ = -11.3%
So we can clearly conclude that the luxury price point across Manhattan has seen demand dry up over the last 3 months, while the most action has been occurring in the <$1M & $2M-$5M segments of the market.
Seller's should be ecstatic that Manhattan continues to see above average levels of contract activity for this time of year, even if today's market is slower than three months ago. The broad decline in active supply across most neighborhoods continues to put pressure on serious buyers whose rental alternatives are seeing rates at 2007 record levels.
As for macro economic worries, sure they still exist but unless we see US equities take a sustained tumble of 15% or more, I don't see any major impact on buyers' confidence towards Manhattan property. If the market were to be in the process of shifting, we would see daily deal volume plummet as bids for property either come in too low, or don't come in at all. So far this has not happened so lets continue to let the data speak for itself.